Ready or not, it has begun.

Three years after tech stocks began their massive slump, investors have once again warmed to the very names that led the market to its blistering highs of the last century.

Sure, we've seen rallies come and go in recent years, and the current momentum could easily fade. But already there have been some startling gains by a few companies that just months ago were struggling to maintain their very solvency.

Stocks like those of optical-networking shops




JDS Uniphase




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-- which peaked at $78, $140 and $108, respectively, in 2000 -- fell more than 90% before hitting bottom last fall. But since then, the stocks have revived dramatically. Nortel shares have risen nearly sixfold from their 48-cent low last year. JDS is up 200% and Corning is a 600% gainer since October, as the Internet gearmakers attract enthusiastic crowds again.

Whether it's a case of surplus investor money with no better place to go, or trust in stocks returning as fraud recedes, or even a fundamental belief that what goes down must come up, the cycle has turned decidedly positive. And just as Wall Street appears bound to repeat some of its old mistakes, a few people have shown that they are bound to try to avoid them.

In fact, as if to tap the brakes on the breakneck run-up, some analysts have recently slapped downgrades on outfits like Nortel and


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, whose revived valuation continues to provoke marketwide debate, but in any case can no longer be called conservative.

"It's not like 1999 all over again, but we are concerned that there has been a lack of attention lately on valuation," says RBC Capital analyst John Wilson. Last month, Wilson cut his rating on Nortel to neutral from buy while trimming Juniper to sell from neutral, as the two companies' stocks rose beyond his price targets.

Similarly, UBS Warburg analyst Nikos Theodosopoulos cut his Nortel rating to neutral from buy last month. Theodosopoulos had a $3.05 price target and instead of simply going along for the ride or even raising the target to accommodate the surging sentiment, he stuck to his plan.

"We had a price target on Nortel and the stock hit the price target. That led to the downgrade," says Theodosopoulos.

By last week, Lehman Brothers analyst Steve Levy had seen enough of the froth and downgraded four networking stocks to sell:

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, Nortel,







"These stocks are being valued using '1999ish' metrics such as high price-to-sales ratios and 'momentum'; neither is a method we are comfortable with, as our memories of the 1999/2000 valuation bubble are just too fresh," wrote Levy in his note on June 9.

Obviously, it's hard to know who is right. The pragmatist camp argues that there's no reason to stray from valuations based on current industry conditions, because there's no sign that phone companies are prepared to increase their spending plans. But by its very nature, bullish speculation anticipates growth that others don't see. Lately, the markets have made the bulls look good.

One thing is certain: These aren't necessarily the same overreaching growth-at-all-cost tech shops they used to be. A steady diet of spending cuts and sales declines over the past three years has served up some dramatic cost reductions, facility closings and firings.

Lean times make for lean companies and, as optimists would argue, for companies that can profitably exploit the next wave of spending when it comes.

A boom in debt refinancing has also added to the excitement. Low- and no-interest convertible bonds have become popular among the tech crowd. Lucent, Juniper,






have each tapped the convert market with the stated intention of using the new loans to pay down older, more expensive obligations.

While in most cases this can lighten debt-heavy balance sheets and help trim interest payments, some observers worry that, like any rush to "cheap" cash, the practice could easily lead to excess. Perhaps most troubling is the question of whether new debt only helps sustain companies that should otherwise fail. Critics charge that the refinancing keeps strong companies weak by keeping the weak companies from failing.

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And interestingly, the latest run-up hasn't been without its pessimists.

Short-sellers attracted to the glow of some of these overbought stocks have placed bets that the shares will fall. But even the shorts have unwittingly contributed to the bullish cause. It seems every tech rally of late has been boosted in some part by short-covering.

Typically, shorts are investors who have borrowed stock on the hopes of replacing it at a lower price. But when the stock rises, they are faced with having to buy at higher levels to cover their positions and prevent further losses. This effectively adds more buyers -- though not necessarily believers -- to the equation.

But until actual demand for new gear returns and sales pick up, the pragmatists aren't willing to join the party. Indeed, some even relish their roles as naysayers.

"I think we are seeing people who were aggressively negative now swinging too far to the positive," says RBC's Wilson. "To be honest, most people are probably investing by following the flow of funds. That's momentum. ... We feel there needs to be some discipline regarding what you pay."